RI Wastes $1 Million on Johnson & Johnson Buildout
GoLocalProv News Team
RI Wastes $1 Million on Johnson & Johnson Buildout
Johnson and Johnson will be moving into the new Wexford campus and will be leaving the recently custom converted space at Ship Street, which was funded with monies from the I-195 Commission. The new Wexford campus also receives substantial state subsidies — in excess of $40 million.
No company has received a more lucrative package of Rhode Island taxpayer-funded subsidies per job than Johnson and Johnson. The $80 billion company was awarded a financial package totaling $6 million for bringing just 75 jobs to Rhode Island.
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When the Raimondo Administration announced the deal with Johnson & Johnson in December of 2016 at the Providence Public Library press conference, they promised a robust package to the New Jersey-based mega-company.
"They will be asking for approximately $6 million in incentives," said Commerce Secretary Stefan Pryor following the press conference at the library. "There will be a qualified jobs allocation as part of that in excess of $4M....there'll be allocations for talent incentives, and there'll be allocations for coverage of costs for the facility One Ship Street."
Commerce tells GoLocal that the $1 million has been spent to buildout Johnson & Johnson’s space. The money was paid to Wexford who purchased One Ship Street. The I-195 Commission approved and funded the Wexford buildout at One Ship Street for Johnson & Johnson.
At a December 2016 meeting of the I-195 Commission, the board approved the $1 million payment. “That the District be and it hereby is authorized to advance up to $1,000,000 from the Project Fund to Applicant and/or its affiliates for the purpose of equipping space in the building located at One Ship Street…”
To date, less than 50 of the target 75 employees have been hired.
On Monday, Raimondo announced that Johnson & Johnson would move to the new Wexford facility in two years when the building is completed — leaving the newly built out space vacant.
Commerce officials confirmed that the only agreement with Johnson & Johnson is for the 75 jobs. No other agreement is pending.
De facto, you can’t be in two places at the same time.
“Wexford partners own 1 Ship Street. The allocation from the 195 Commission for costs associated with the buildout of 1 Ship was to Wexford -- not the tenant or tenants that are occupying the space. The same is true regarding the incentives awarded to Wexford for the development of the Innovation Center,” said Matt Sheaff, spokesperson for RI Commerce Corporation
“We believe, based on third-party analysis, that Johnson & Johnson and the Wexford Innovation Center will have a net positive economic impact to the State of Rhode Island,” added Sheaff.
Could Johnson & Johnson Leave RI?
According to Commerce officials, Johnson & Johnson could leave Rhode Island at any time and only pay a small penalty. As the buildout incentive both at One Ship Street ($1 million) and $40 million (Wexford Campus), the penalties are limited.
“The term of the tax incentive agreement is 10 years, and J&J has committed to maintaining the new jobs in Rhode Island for at least 12 years. The incentive is funded and based off the actual income tax the actual jobs are paying — if the jobs haven’t been created and paying income tax for a year, the company does not receive the tax credit,” said Sheaff. “Yes, there is a financial penalty for ceasing operations or relocating half or more of the workforce. Payments stop. And 20% of all incentives to date must be repaid.”
But the incentives for the space are all paid to Wexford, so Johnson & Johnson would have no liability on the space.
As the Raimondo administration, Wexford, and the tenants (in the buildings which receive $40 million in tax subsidies) refuse to release the lease agreements it is unknown if the rents are subsidized by the taxpayer contributions.
On Monday, Rhode Island Gina Raimondo and other dignitaries broke ground on the long-awaited Wexford project on I-195 land. The project moves forward with more than $40 million in state subsidies, but officials from Wexford, Brown University, and now Governor Gina Raimondo all refuse to disclose the lease agreements between Wexford and its tenants - claiming they are private.
Raimondo lauded the project, but in an interview with GoLocal continued to refuse to answer questions about the leases between Wexford and Brown University, Cambridge Innovation Center, and Johnson & Johnson.
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